A New Bundle Jungle for Travelers

Airlines unbundled their service, charging separately for baggage, food, even advance seat assignments. Now they are rebundling. Scott McCartney compares bundles at various airlines and show which ones are worth buying and which ones are dogs. Photo: Getty Images.

By

Scott McCartney

Jan. 30, 2013 6:31 p.m. ET

With your airline ticket, would you like to add "Ascend" or "Lift?" Perhaps you prefer "Choice Seats" or "Choice Plus?" Or maybe you're a "Main Cabin Select," "Main Cabin Extra" or even "Main Cabin Express" traveler?

Air passengers increasingly are facing such choices when they log in to carriers' websites. Borrowing a marketing practice from auto makers, phone companies and others, airlines are moving quickly to bundle options in packages designed to get customers to spend more. They also are increasingly tailoring and targeting bundles to specific customers based on past purchases and profile. The moves reflect an industry shift beyond "unbundling" their services so carriers could charge extra fees for items such as checked bags and pillows.

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"A coach seat is not just a coach seat anymore," said Tim Mapes, senior vice president of marketing at
Delta Air Lines
.
The carrier last year began offering two packages called "Ascend" and "Lift" aimed primarily at business travelers and plans many more packages targeted to different kinds of travelers, he said.

Delta rebuilt its website with the ability to target specific bundles to particular travelers and trips. In the future, a business traveler who occasionally buys Wi-Fi service, for example, may get an offer that includes town-car or even helicopter service to downtown. And a family heading to the beach may get offered a package with meals, drinks, baggage fees, lounge access or in-flight movies.

More on Bundles

"We're in our infancy on this. This is the tip of the iceberg," Mr. Mapes said.

Some airline offers are good deals that save money or get you valuable flexibility, such as change-fee waivers. And some are a waste of most travelers' dollars: Spending $177 for early boarding and a regular seat near the front of the coach cabin for a round-trip, cross-country itinerary on
US Airways
seems like a rip-off when you can get extra-legroom seats for about the same price on other airlines.

The airline industry has "been in a frenzy to create more or carve out more products. Airlines see it as a necessity," said Rick Elieson, American Airlines' managing director of digital marketing.

An irony is that demand for one of the most popular bundle elements—earlier boarding—was created by an airline fee: checked-baggage charges. To avoid fees, passengers carry more onboard, filling overhead bins. Those who board last risk having bags checked at the gate, creating waits at baggage claim and the risk of lost bags or stolen valuables.

ENLARGE

Leigh Wells

Fees, penalties and add-ons contribute significantly to airline profits. In the third quarter last year, U.S. airlines collected $924 million in baggage fees, up 3% from a year earlier, and $652 million in reservation-change fees, up 8%. Airlines don't break out ancillary sales like priority boarding or extra-legroom seats, but they see that as a major growth area.

In December, American started packaging bundles into the first fare offer customers get when searching on the airline's website. A basic low fare is shown, plus a Choice Essential fare that is $68 more round-trip and a Choice Plus fare that is $88 more than the lowest price. Choice Essential gets you Group 1 boarding, a checked bag and a waiver of the airline's $150 domestic-change fee. Choice Plus adds a cocktail and 50% mileage bonus.

Putting the bundle into the first fare screen rather than throwing add-on fees at customers after they select a price is American's attempt to ease the "nickel and diming" effect, Mr. Elieson said. "The idea of not being able to see exactly what you get up front was chafing," he said.

American didn't include anything in the bundles that had limited availability, like particular seating, so its bundles could be offered to all passengers without selling out.

ENLARGE

Which airline bundles are worth the price?
Bloomberg News

Mr. Elieson said avoiding the airline penalty to change a nonrefundable ticket, typically $150 plus the fare difference, has become important to customers, especially elite-level frequent fliers. Some customers who often have to change plans might find the $68 Choice Essential package reasonable insurance against the change fee. For travelers who pay to check bags, the $68 covers $50 in bag fees and American's early-boarding option, which it sells separately for $18 round-trip. People who pay to check bags and like early boarding essentially get the change-fee waiver free.

"We tried to create a product with broad appeal," Mr. Elieson said.

Since the product was introduced, complaints about ticket-change fees are way down at American, Mr. Elieson said. Some of that may just be from giving customers the option to pay their way out of the penalty fee. If they end up with the penalty, they may be less irritated since they consciously decided to take the risk, he said.

United Airlines had an extensive bundling menu but had to drop most of it last March when it switched to the Continental Airlines computer system. A spokesman said United hopes to reintroduce its Premier Travel bundle, perhaps with a different name, by early 2014. The bundle combined the priority-boarding package it currently sells with its Economy Plus extra-legroom seating, two checked bags and additional frequent-flier miles.

Southwest Airlines
bundles priority boarding, extra frequent-flier points and an alcoholic drink into a $28 per flight Business Select up-sell of its unrestricted Anytime fare. Earlier in January, it began selling a new way to jump to the front of the boarding line. About 45 minutes before departure, and again 15 minutes before departure, gate agents offer spots at the front of the boarding line for an extra $40 per flight.

Since Southwest has open seating, jumping to the front of the line can yield a better seat, perhaps even in an emergency exit row. The Early Boarding upgrade is available only if there are unsold Business Select spots in Southwest's first boarding group.

"There are customers out there who want it. It's not for everybody," said Kevin Krone, Southwest's vice president of marketing, sales and distribution. "But some people say, 'Hey, I had a long day and I forgot to check in and so I have a lousy boarding pass number. So today I'll pay $40 to move up.' "

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